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If the lien for the second mortgage can be removed, it is not too late. You can have your Bankruptcy case re-opened for the sole purpose of filing a motion to have the lien removed.
Once the motion is heard, the case will then be closed.
If it's reopened, will the courts or trustee try to look at our current financial situation, or will it focus only on that part of the 2009 bankruptcy that should be corrected? Can I write to the US court jugde and request this, or should I have an attorney?
The Bankruptcy court will not look at current financial or other information, and will focus only on your request to have the lien removed based on the fact that the mortgage was unsecured in 2009.
This is something you can do on your own.
You should be able to get the necessary forms and instructions from the clerk at the Bankruptcy court.
The mortgage was not unsecured in 2009, my attorney was not familiar enough with the difference between Chap 7 and 13. We qualified for both, but wanted to make sure our second mortgage was included. The attorney erroneously thought he could include the second mortgage in a chapter 7 and he listed it as "unsecured" which is what should have happened in a chap. 13. The trustee caught his error after the bankruptcy was discharged and moved (without and objection from our attorney) to return the second mortgage to a "secured' state - - that's why we currently have the second mortgage lien on our property - - solely due to our attorney's ignorance. Do you now see any way to try to get the judge to remove the lien - - we don't pay anything on the mortgage , there's just a lien.
If your second mortgage was secured for your Chapter 7, then it would also be secured for a Chapter 13.
Whether a mortgage is secured or unsecured does not depend on the type of Bankruptcy that was filed.
If you answer the following, I can tell you whether your second mortgage was secured or unsecured when your Bankruptcy was filed:
1) What was the market value of your home when your Bankruptcy was filed?
2) What was the balance owed for your first mortgage when your Bankruptcy was filed?
(If the second mortgage was secured, the lien cannot be removed.)
505,000 - - we met all the criteria from the 2005 Bankruptcy revisions to have our 2nd mortgage incluced in the bankruptcy.
We owed 400,000 on the first mortgage when the bankruptcy was filed ( and 135K on the second).
To be clear, the home was valued at $505K, we owed 400K on the first and 135K on the second.
OOPs actually we owed about 414K on the first.
Then the second mortgage was secured and unfortunately, it would not be possible to have the second mortgage lien removed.
How do you come to that conclusion?
Liens can only be removed when the second mortgage is completely unsecured. If the balance on the first mortgage was less than the value of your home, then the second mortgage was partially secured.
A second mortgage is completely unsecured only when the balance on the first mortgage is greater than the value of your home.
I was told by the paralegal, that the court also allows 10K per person and 10% of home value to be added to the difference between the first mortgage and the home value to determine if the second would become unsecured. Is this incorrect
5 - 10% is subtracted from a home's value to determine whether one's homestead exemption can prevent the Bankruptcy trustee from taking one's home. I have never heard of using a percentage to determine whether one's mortgage is secured or unsecured. But adding $20K and $50.5K to the balance of the first mortgage would still result in a balance that was less than the value of your home.
I am sorry I could not give you better news.
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